M/S Zephyr International vs. The Principal Commissioner Of Customs

Held

The Court noted that the petitioner had already received the full refund amount, rendering the primary prayer for refund moot. However, the claim for interest on the delayed refund was still alive. The Court referred to Section 56 of the Goods and Services Tax Act, 2017, which provides for interest on delayed refunds. The Court held that the petitioner could make an appropriate application to the Goods and Services Tax Authority for claiming interest on the refund. The competent authority is directed to consider such an application, if filed within 15 days from the date of the order, and decide the matter regarding the grant of interest within six weeks from the receipt of the application, in accordance with the law. The Court did not explicitly decide on the rate of interest or the exact period for which interest is payable, leaving these to be determined by the authority upon application.

Facts

M/s Zephyr International, a partnership firm, exported goods between November 2019 and June 2020. The petitioner claimed eligibility for a refund of Integrated Goods and Services Tax (IGST) amounting to Rs. 1,31,89,893/- and duty drawback of Rs. 6,98,991/-. These amounts were withheld by the respondent authorities. The petitioner filed a Special Civil Application seeking directions to sanction the IGST refund for zero-rated supplies made via shipping bills and to pay interest at 24% on the refund amount from the date of shipping bills until payment. During the hearing, the petitioner's advocate stated that the principal prayer for refund had been satisfied as the refund amount was received in full. However, the claim for interest on the delayed refund remained.

Key Issues

1. Whether the petitioner is entitled to interest on the delayed refund of IGST, considering Section 56 of the Goods and Services Tax Act, 2017? Petitioner's contention: The petitioner argued that it is entitled to interest on the delayed refund of IGST. While the principal refund amount has been received, the claim for interest, as contemplated under the statute, survives. The petitioner pressed for the prayer regarding the grant of interest. Revenue's contention: The judgment does not record any specific arguments made by the revenue or respondent authorities regarding the petitioner's claim for interest. The court's observations suggest that the petitioner should make an appropriate application to the Goods and Services Tax Authority for the grant of interest.